Mapping next big steps in India-US Defence Partnership

Ahead of Prime Minister Narendra Modi’s visit to the United States, the Cabinet Committee on Security approved the purchase of Boeing’s Apache and Chinook helicopters for the Indian Air Force. In a major impetus to defence ties, this deal worth $2.5 billion is the biggest defence contract signed by the NDA government after coming to power in May 2014. The deal for 22 Apache attack and 15 heavy lift Chinook helicopters reportedly comes with an option for follow-on orders for 11 more Apaches and 4 additional Chinooks. Over the last decade, defence cooperation between India and the US has gained momentum and is driven by mutually symbiotic interests – strategic posturing and enhancing defence trade and commerce. There is a growing congruence between the United States and India’s Asia-Pacific policy and both the countries have a significant stake in regional stability which is aimed at retaining status-quo and multipolarity.

During the first Indo-US Strategic and Commercial Dialogue on September 22, 2015, the two countries focused on regional cooperation. Announcing the ‘New Diplomacy Partnership’ to align interests between India and the US at both regional and global level has added strategic heft to existing ties. These developments to the run-up of PM Modi’s visits are not just optics but have real power to propel India-US partnership to greater heights. India’s bilateral relations with the US are going through a promising phase and to ensure the robustness of this partnership, the two countries need to prioritize efforts to overcome challenges. Lack of effective implementation of the outlined policies in the realm of defence would be a challenge that would mandate the immediate attention of the Indian government.

The recently signed deal between India and the US for Apache and Chinook heavy lift helicopters has been structured in two parts: the first one being a Direct Commercial Sale (DCS) – the contract will be signed with Boeing for the attack helicopter, while the second part of the deal would entail a Foreign Military Sales (FMS) agreement with the US government for its weapons, radars and electronic warfare equipment. The purchase of Apache and Chinook helicopters serve as a huge boost for the air force and have greatly added strategic value to India’s list of defence inventory. However, going ahead in the likely case of procurement of the attack and heavy lift aircrafts in larger numbers, there should be an element of transfer of technology and co-production. During PM Modi’s September 2014 to Washington, he along with President Obama pledged to deepen existing ties in defence cooperation to bolster security and treat each other as their ‘closest partners’ in defence technology trade. Though defence trade between the two countries within a decade has reached circa $9 billion, there are structural challenges in the relationship that needs to be addressed to achieve equal partnership in truest terms. So far the bulk of the India-US defence trade has been through Foreign Military Sales (FMS) route—a programme which facilitates sales of U.S. arms to foreign governments. However, in the long run importing through the FMS route would be untenable for the Indian government as the FMS route is not based on competitive market principles.

Making DTTI work

Dependence on arms imports from the US stymies the Indian government’s intent to allow indigenous defence industries to play a greater role in defence indigenization. Additionally, the Department of Defense (DoD) charges an administrative fee for processing procurement for government-to-government sale. The FMS route is also unsustainable in the long-term as it involves a one-time purchase from American defence contractors and does not add any technological “know how” to Indian partners. Thus, when India procures the big ticket defence hardware, it is important that the Indo-US incrementally move towards frameworks which make the process of Transfer of Technology (ToT) easier and swifter. Several decades of dependence on Soviet military hardware has failed to build India’s indigenous manufacturing base. Success of Indo-US defence partnership would depend on the extent to which both the countries are able to accomplish co-production and co-development goals under the aegis of Defence Technology & Trade Initiative (DTTI). American efforts in gradually enabling India to attain self sufficiency in defence manufacturing would not only generate economic spin-offs for the country but also create jobs for Americans.

It is understandable that Washington would be unwilling to part with the know-how of cutting-edge technology which provides the US defence industry with the competitive edge. However, India and the US should make efforts to rise above the procedural challenges of ToT to focus on DTTI under which both countries are exploring the joint production of military hardware. Despite a steady rise in licensing of US defense hardware to India, stringent American laws requiring Technical Assistance Agreements and Manufacturing Assistance Agreements have failed to incentivize co-development which would entail India and the US to jointly manufacture defence hardware. Stimulating the process of co-production would necessitate more flexible regulatory frameworks to allow American defense companies to share technologies with Indian partners expeditiously. As the scale of transfer of technology (ToT) interaction between India and the U.S. increases, issues of Intellectual Property Rights would simultaneously gain significance. Hence, greater harmonization of Validated End-User agreements (VEU), which allows VEU-approved countries to receive U.S.-controlled products and technologies more easily and reliably, needs to be encouraged.

The Way Ahead

As India and the US are taking steps to take defence partnership to the new level embarking on co-development and co-production of defence technologies, synchronising end-user agreements would help develop India’s private sector into the role of systems integrator. However, there are concerns that India is not in a position to absorb the transfer of advanced technologies. U.S. Senators John Cornyn and Mark Warner have noted that India’s heightened expectations for ToT outpaces India’s offset absorption capacity. Thus, from the Indian side, the ToT proposals needs to be approached from a perspective of sensitivity with regards to what can be achieved with the technology received.

As the power balances of the 21st century shift, Indo-US defence partnership will not be solely about defence commerce; instead this vital partnership flows from geopolitical interests. To sustain the momentum of burgeoning defence ties, India and the United States should undertake proactive measures to resolve the complex policy challenges faced by both nations towards bilateral cooperation.As the US continues to bolster India’s militarily preparedness through sales of sophisticated defence hardware, intensified cooperation on counter-terrorism efforts and intelligence sharing, a militarily strong India complements America’s security goals of a stable multipolar Asia-Pacific.

(Sylvia Mishra is a Researcher with the Observer Research Foundation, New Delhi )

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